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Understanding Automobile Insurance – What Do All Those Terms on My Policy Mean?

By July 11, 2017April 2nd, 2020Auto Insurance

Do terms like liability, comprehensive coverage, and underinsured seem like a foreign language to you?  If so, you are not alone.

Ross Turner’s wife loves to tell the story of when Ross first reviewed her auto insurance policy.  Both were single at the time, and Julie’s insurance bill was due.  Ross looked at the policy and couldn’t believe his eyes.

Julie had the minimum limits and very little coverage – on her brand new 1988 Honda Accord!  When he asked her why, she said she had called an 800 number and asked for the best price.  She had no idea that her policy would not have paid enough if she had been in an accident.  Suffice it to say, Ross eventually became her insurance agent and her husband…in that order!

It’s important to understand your automobile insurance coverage, even though it can seem complicated. Take a moment to review these key auto insurance terms and what the mean to you:

Liability Insurance – This coverage reimburses others for injury, damages or losses caused by your driving or your car. There are two types:

  • Bodily Injury Liability – In a car crash where you’re at fault, bodily injury liability will provide compensation for pain and suffering, lost earnings and related expenses resulting from injury or death. We advise you take the highest limits possible.  At a minimum you want to protect your assets, knowing that you can be sued over your current assets as well as any future wages and/or inheritance.
  • Property Damage Liability – This coverage will pay to repair or replace things you damage in an accident other than your own car. Again, it’s best to consider your personal situation.

Collision Insurance – Collision covers the replacement or repair of your car, regardless of who is at fault in the accident, even if you are hit while parked or hit by an unknown car or object. If you have a car loan, you are required to have collision protection. On the other hand, if your older car’s value rises and falls based on the gas in its tank, you may consider dropping collision coverage.

Comprehensive Insurance– Comprehensive coverage protects against damage to your car that does not involve a collision (examples include fire, theft, hail, flood, windstorm, flying objects or animals). It’s likely required if you’re paying a car loan, but optional if you own an older car that’s not worth much.

Medical Payments Coverage– This helps pays for physicians, hospital bills, continuing care, funeral costs and compensation for you and your passengers, regardless of who is at fault. If you have adequate health insurance, you may not need this optional coverage, but it can pay expenses your health insurance may not cover.

Uninsured and Underinsured Coverage– This covers you and members of your household, for losses in an accident with a hit-and-run driver or a driver who has no car insurance or not enough car insurance.  Four of the top ten claims ever paid out of our office were due to underinsured claims, so we highly recommend this coverage.

The Turner Agency, Inc. is a local Trusted Choice® independent insurance agency located in Greenville, South Carolina and in Clemson, South Carolina as The Sosebee Agency. Serving the Upstate of South Carolina and beyond since 1962, we offer a variety of personal and business coverage choices and can customize an insurance plan to meet your specialized needs for home, auto, business, or other insurance products.  Contact The Turner Agency or the Sosebee Agency, a Turner Agency partner, today.

The information in this article was obtained from various sources and is not all-inclusive regarding the subject matter. This content is offered for educational purposes only.